Garuda Plans to Shake Up its Route System, Again

More Seats Promised on Australian and Regional Routes Together with New Boeing 737-800 NG Aircraft.

(2/24/2007)

Garuda Indonesia is targeting to carry 2.53 million foreign passengers in 2007, an increase of around 15% from the estimated 2.2 million carried in 2006.

Garuda's President Director, Emirsyah Satar, told the Indonesian-language Bisnis Indonesia that he is confident passenger targets will be met as the Airline is once again evaluating the viability of all its domestic and international routes.

"The route which lose money will be restructured, including those losses caused by the high leasing and maintenance costs of the Airbus 330, " Satar explained on February 20, 2007 to a hearing of National legislators. In the same meeting, Satar complained that the commercial momentum lost in the Japanese and Australian markets following the second Bali bombing of October 2005 had yet to fully recover.

Of the 24 international routes flown by Garuda in 2006, only 9 (37.5%) were considered profitable by Garuda. In 2005, Garuda managed to register a profit on 16 (55%) of the 29 international routes it operated.

On its domestic routes Garuda managed to sustain higher rates of profitability. In 2006, 21 (77.8%) of the Airline's 27 domestic routes proved profitable. This was an improvement over 2005 when only 9 (36%) of 25 domestic routes turned a profit.

The Airline reportedly plans to increase capacity on those routes that have proven profitable in 2006. This will likely include flights to Australia, China and regional destinations within ASEAN. "In addition," Star said, "Garuda will commence flights to India this year as that country appears to have strong tourism potential for Indonesia."

Boeing 737-800 New Generation Aircraft

The Garuda boss also said that 2007 will see two Boeing 737-800NG added to its fleets under leasing agreements costing US$1.6 million.

The sophisticated "new generation" Boeing aircraft, able to operate on medium and longer haul routes, are scheduled to arrive in the third and fourth quarters of 2007.

In the future, Garuda has announced plans to introduce 25 B737-800 NG aircraft within the context of ongoing efforts to improve efficiencies and rationalize its fleet.

Initially, the financially troubled Airlines will find money to pay the new aircraft's charter fees from a US$52.5 million capital injection from the Government. The "fresh" capital will also be used to service existing debt and retrench some of its employees.